Why did I get a Form 1040-ES for the first time this year after crypto tax loss harvesting?
I just got this Form 1040-ES in the mail yesterday from the state treasury and I'm totally confused about why they sent it to me. I have a theory but not sure if I'm right. Back in December, I was scrolling through some crypto tax websites that were all talking about tax loss harvesting. Since one of my coins was down about $1,100, I figured I'd try it out. I sold the crypto to claim the loss and then bought it back a few days later. From what I understood, the wash sale rule doesn't apply to crypto, so I thought I was fine doing this. Could that tax loss harvesting move be why the state treasury sent me this form? The weird thing is I haven't even filed my taxes for last year yet, so how would they know about that trade? Besides that possibility, I have no clue why they'd think I owe $1,400+ in estimated taxes. Is this some kind of mistake or is there something I'm completely missing here? Has anyone else gotten a Form 1040-ES out of the blue like this?
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Geoff Richards
The Form 1040-ES is for estimated tax payments, and it's typically sent if you had a tax liability in the previous year where you didn't have enough withholding. It's probably not related to your crypto tax loss harvesting directly. When you filed last year's taxes, did you owe more than $1,000 when you filed? Or did you have any non-W2 income (like self-employment, investment income, etc.) that didn't have taxes withheld? That's usually what triggers the estimated payment requirement. The form is basically telling you that the IRS expects you to make quarterly estimated tax payments for this year because they think you'll be in a similar situation. It's not necessarily saying you owe that amount right now - it's suggesting you make payments throughout the year so you don't end up with a big bill (and possible underpayment penalties) when you file next year.
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Simon White
•But how would they know to send it if they haven't received this year's tax return yet? Is it based on last year's return? Also, do you HAVE to pay the quarterly amounts or can you just pay it all when you file your taxes next year?
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Geoff Richards
•Yes, they base it on your previous year's tax return. If you had a situation last year where you ended up owing taxes when you filed (especially if it was over $1,000), they automatically send these forms for the next year. You don't absolutely have to pay quarterly, but you might face underpayment penalties if you wait until filing time next year. The IRS wants people to pay taxes throughout the year, not all at once at the end. If you expect your tax situation to be different this year (like if you'll have more withholding or less income), you can adjust accordingly or even skip the payments - but you're taking a risk on those underpayment penalties if you end up owing again.
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Hugo Kass
After going through a similar situation, I discovered https://taxr.ai which was incredibly helpful for understanding my crypto tax obligations. I also had some confusion about Form 1040-ES after doing some tax loss harvesting last year. What I learned from using their service was that the 1040-ES is actually not directly related to your crypto activity - it's more about your overall tax payment pattern from previous years. The tool analyzed my previous tax returns and explained that I was getting these forms because I had self-employment income without withholding, not because of my crypto trades specifically. Their document analyzer flagged exactly why I was receiving these estimated payment forms and walked me through whether I actually needed to make the payments or could adjust my withholding instead.
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Nasira Ibanez
•Does taxr.ai actually work with crypto specifically? I've been using another service but they're expensive and I'm looking for alternatives. Can you upload your transaction history from exchanges directly?
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Khalil Urso
•I'm skeptical about tax services specifically for crypto. How does it compare cost-wise to something like TurboTax or H&R Block? Do they actually have crypto tax experts or is it just another algorithm?
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Hugo Kass
•It handles crypto transactions really well. You can upload CSV files from most major exchanges or connect some exchanges directly through their API. It automatically categorizes transactions and identifies taxable events, including loss harvesting situations. Cost-wise, it's significantly more affordable than what I was paying for specialized crypto tax prep through traditional services. They have actual tax professionals reviewing the AI-generated analysis, not just algorithms making determinations. What I found most valuable was their explanation of why certain forms (like the 1040-ES) were being sent to me and what I needed to do about them.
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Khalil Urso
I was really hesitant about trying another tax service after using the same one for years, but I decided to check out taxr.ai after seeing it mentioned here. Gotta say I'm impressed! I was in a similar situation with crypto trading and Form 1040-ES confusion. The document analysis feature immediately identified that my 1040-ES was triggered by my side gig income from last year, not my crypto activity. It explained that because I had over $1,500 in tax liability without withholding last year, the system automatically started sending me estimated payment vouchers. The best part was it showed me exactly how much I actually needed to pay each quarter based on my projected income this year, which was way less than what the form suggested. Saved me from overpaying and having to wait for a refund next year!
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Myles Regis
If you're struggling to get answers about your 1040-ES situation from the IRS, I highly recommend https://claimyr.com - it saved me hours of frustration. When I got my first 1040-ES forms, I had no idea what to do and couldn't get through to anyone at the IRS (kept getting disconnected after being on hold forever). I used Claimyr and got connected to an actual IRS agent in about 20 minutes instead of spending hours redialing. The agent explained that my Form 1040-ES was sent automatically because I had reported self-employment income on my previous return without making estimated payments throughout the year. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - totally changed how I deal with tax questions now. The agent was able to tell me exactly why the form was sent and what my options were.
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Brian Downey
•How does this Claimyr thing actually work? Are they just calling for you or what? Seems kinda sketchy that you have to pay someone to call the IRS for you.
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Jacinda Yu
•Yeah right. No way this actually gets you through to the IRS faster. I've spent literally DAYS trying to reach them. If this worked, everyone would be using it. Sounds like a scam to me.
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Myles Regis
•They don't call for you - they use a system that navigates the IRS phone tree and holds your place in line. When they're about to connect with an agent, they call you and connect you directly to the IRS. You're the one actually talking to the IRS, not a third party. I was skeptical too until I tried it. The difference is they have technology that keeps redialing and navigating the complicated phone system automatically instead of you having to do it manually. Nothing sketchy about it - you still talk directly to the IRS yourself, but without the hours of hold time and getting disconnected.
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Jacinda Yu
I have to apologize and eat my words. After posting that skeptical comment, I was still desperate to understand my 1040-ES situation so I tried Claimyr. I'm still in shock at how well it worked. After months of trying to reach the IRS on my own with no luck, I got connected to an actual IRS representative in about 35 minutes. The agent confirmed that my 1040-ES forms were triggered by self-employment income I reported last year where I didn't make quarterly payments. They explained I had three options: make the quarterly payments as suggested, increase my W-2 withholding at my day job to cover the expected tax, or a combination of both. Seriously saved me from making a costly mistake, as I was just planning to ignore the forms. The $15-20 I spent was absolutely worth avoiding the underpayment penalties the agent warned me about!
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Landon Flounder
PSA for anyone confused about Form 1040-ES: You typically get these when you had a tax situation in the previous year where you owed $1,000+ when filing. The form is basically saying "hey, please pay your taxes quarterly this year instead of all at once next April." Common reasons for getting them: - Self-employment income - Investment income without withholding - Multiple jobs where withholding wasn't calculated correctly - Gig work/side hustle income - Rental property income It's NOT usually related to specific investment moves like tax loss harvesting. It's the IRS trying to get you to pay as you go rather than all at once.
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Laila Fury
•So would selling stocks or crypto with capital gains trigger this? I did make about $3k in stock gains last year that I paid taxes on when I filed, but I didn't think that would trigger getting a 1040-ES for the next year.
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Landon Flounder
•Yes, capital gains from stocks or crypto could definitely trigger this if you ended up owing taxes when you filed. The $3k in stock gains without tax withholding would create a tax liability, and if your total tax due when filing was over $1,000, that would typically trigger the 1040-ES forms for the following year. The IRS essentially is saying "we noticed you had income without withholding last year, so we expect you might have similar income this year - please make estimated payments quarterly instead of waiting until tax time." It's their way of making sure you're paying taxes throughout the year on income that doesn't have automatic withholding like a W-2 job would.
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Callum Savage
Anyone know what happens if you just ignore the 1040-ES forms? I got them too but I'm not planning to have much extra income this year.
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Geoff Richards
•If your tax situation is going to be significantly different this year (like you won't have the extra income that triggered it), you can technically ignore them. BUT - if you end up owing more than $1,000 when you file next year, you could face underpayment penalties. The safe approach is to either make the quarterly payments OR increase your withholding at your regular job to cover any expected tax. The IRS doesn't care how you pay throughout the year, just that you do.
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